On December 10, 1998, the Federal Election Commission (FEC or
Commission) approved a motion rejecting certain staff recommendations for
repayment of public funds in the audits of the 1996 Clinton and Dole campaigns.The repayment recommendations in question stemmed
from party ads that would cause excessive spending if attributed to the candidates
campaigns.

This vote, although unanimous, reflected
several different rationales among the six voting commissioners.The media reports and editorials following the
vote did not capture the distinctions and nuances involved.It is for that reason I offer the following preliminary statement explaining
my vote and my avid dissent from the legal theory underlying the vote of three of my
colleagues.

I clearly indicated during the previous two days of discussion my agreement that
certain of the ads in question should be attributed to the candidates campaigns, and
should generate a repayment to the extent excessive expenditures resulted.I further indicated, however, that some of the ads
fell short of being attributable to the candidates campaigns.Moreover, I believed the national parties were
legally free to use their available coordinated expenditure allowances for any of the ads.Where the parties so chose, the ads should not be
attributable to the candidates campaigns.Thus,
on the motion proffered, I voted in the affirmative because the motion was to reject the
staffs repayment recommendation that encompassed all the ads in question.

It would have been an exercise in futility to attempt separate votes on whether to
seek repayment with regard to each of the ads in question.The previous day, December 9, three commissioners (Mason, Wold and Elliott)
indicated they would not vote to seek repayment relating to excessive spending by a
primary campaign under any circumstances.Thus, even if at least four commissioners believed
certain ads should count toward a candidates spending ceiling, there would be no
repayment because, according to these three

commissioners, any repayment order for excessive primary campaign
spending would be beyond the FECs authority.See
Agenda Docs. 98-92 and 98-92A.

Faced with the reality of no repayment at all regarding excessive spending
generated by the party ads, the question remained whether to debate further for
hoursperhaps daysabout determining some or all of the ads to be
in-kind contributions for purposes of the audit report.See, e.g., Report of the Audit Division on Clinton/Gore Primary Committee,
Inc. at 43.In view of the need to complete
the audits in time to meet the three-year statute of limitations,[1]
and in view of the awkwardness of publicly discussing matters that would now onlyhave relevance to potential confidential
compliance determinations,[2]
commissioners opted to instead direct the Audit Division to revise the report to simply
clarify that the factual and legal analysis therein regarding the party ads does not
reflect any commissioner determinations.[3]

The net result of the votes taken on
December 9 and 10 is that any repayment stemming from the party ads is off the table, and
any further action regarding the ads will occur, if at all, in the context of a compliance
action.Without presaging whether any
findings of civil violation will be made, it is theoretically possible the FEC will press
forward in the enforcement track and obtain civil penalties or some other form of monetary
or injunctive relief.The doom and gloom
described by commentators is perhaps premature.

Regardless, several important points should
be made about the view taken by three commissioners that no repayment whatsoever may be
required for excessive spending by a primary candidate.I find this approach plainly contrary to public policy, in flat violation of
majority-passed FEC regulations, and far less justified by the statute than the
agencys long-held interpretation.

It is hardly compatible with the
presidential public funding program toallow
a candidate who spends above the spending ceiling to escape repayment of the public funds
that were constructively involved.This is
just as true in the primary matching fund program as it is in the general election program
where major party candidates have been given a full grant.In both situations, public funds should be recovered where they were used to
get to the spending ceiling but not needed.In
other words, a campaign should be forced to return to the Treasury the amount of public
funds used getting to the limit that corresponds to the amount of private funds otherwise
spent to go above the ceiling. Where campaigns cheat on the spending ceilings, they should
disgorge any public funds not needed to get to the ceiling in the first place.[4]

The so-called mixed pool theory
in the matching fund context properly addresses this public policy.By treating all available resources as
fungiblejust as all the expenditures making up the spending total are
fungiblethe Commission properly requires repayment of the portion of any excess
spending that corresponds to the public funds ratio.Importantly, the mixed pool theory only works if all
resourcespublic funds, private contributions deposited, and in kind contributionsare included.Just as in kind contributions must be counted as
part of the expenditure total, they must be counted as part of the receipt total. Only
this way does the ratio accurately reflect the overall financial support provided to a
campaign and the relative importance of public funding to an impermissible expense.It wouldnt make sense to have a repayment
ratio generate a larger repayment than actually was justified.[5]

Apart from undermining the public policy
rationale for seeking repayment of primary matching funds constructively used for
excessive spending, my three colleagues side-stepped a Commission regulation explicitly
treating excessive spending as a non-qualified expense that generates repayment.[6]Commissioners cannot simply disobey a
duly-promulgated regulation interpreting the statute.See 2 U.S.C. §§ 437c(b), 437d(8), 438(a)(8).Even if a commissioner believes the majority that
passed the regulation misinterpreted the statute, the regulation is still the law of the
land until rescinded by a majority vote.[7]Thus, in the audits at hand, my colleagues were
badly in error in when arguing that the agency has no authority to order repayments from
primary campaigns that exceed the spending limit.

This error was compounded by a statutory
construction that is less plausible than the statutory construction reflected for years in
the FECs regulation.The mere fact that
the primary-related provisions[8] do not contain a distinct
repayment clause regarding excessive spending like that found in the general-related
provisions[9]
suggests only that in the few years after the general-related provisions were enacted the
drafters realized that excessive spending was itself a non-qualified expense already
covered by a separate repayment clause.[10]Moreover, one could argue the qualified campaign
expense limitation

at 26 U.S.C. § 9035, which says [n]o candidate shall knowingly
incur qualified campaign expenses in excess of the expenditure limitation at 2
U.S.C. § 441a(b)(1)(A), suggests on its face that anything incurred beyond that amount
would not be deemed qualified.[11]To adopt a tortured construction that would leave
the FEC with authority to seek repayments for general election overspending, but not for
primary election overspending, is far less logical than these simple interpretations.

The approach adopted by my three colleagues
has caused a serious breach in the public funding program.Recouping public funds that were constructively used in excessive spending
is the most basic of principles.While it is
true that the FEC can attempt to secure some form of relief in the compliance track, the
burden of proof, standard of review, and procedural posture would be different.Moreover, there is no good reason to simply
pass on the excessive expenditure repayment process in the 1996 election cycle
when it has been followed in previous cycles with judicial approval.[12]It makes the FEC look somewhat lawless.

[3]
The FEC also voted on December 9 to treat any RNC ads run before the convention nomination
as primary-related, rather than general-related.This
was to afford equal treatment with the DNC whose ads were subjected by the staff to an FEC
regulation allocating to the primary any communications not exclusively general-related.Common sense dictates that the RNC ads run before
the nomination were no more exclusively general-related than those of the DNC.

[4]
All expenditures should be deemed equally responsible for causing the overage; without the
early spending, the later spending would not cause a problem.In the general election context, where it is
obvious that funding other than the full grant was used to cause excessive expenditures,
it is likewise obvious that the campaign had enough funding to reach the spending limit
without the full public grant.That is the
rationale for recouping an amount of public funds equal to the overspending.It is as if the spending from private sources
took the campaign to the limit, and the campaign then used public funds to go over the
limit.Similarly, in the primary election
context, it is as if purely private funding equal to the amount of the overage was used to
get to the limit and the mix of private and public funding was used for the overage.Thus, the FEC recoups the public funding portion.

[5]
Commissioners who relied on Kennedy for President v. FEC, 734 F.2d 1558 (D.C. Cir.
1984), for the proposition that the mixed pool theory only applies where expenditures made
from committee accounts are involved are way off base.Though the case hammered home the proposition that only an amount representing
public funds can be recouped for non-qualified expenses in the matching fund context, it
in no way suggested in-kind contributions are not to be included in the mixed pool.Indeed, as the General Counsel noted at n. 2 of
Agenda Document 98-95, the D.C. Circuit indicated clearly that such contributions are to be included.734 F.2d at 1562 n. 5.

Nor do the
FECs regulations using the term deposits to explain the ratio
calculation, 11 C.F.R. § 9038.2(b)(2)(iii), mandate exclusion of in-kind contributions.In kind contributions are treated as though they
were standard contributions of money that were simultaneously used for an expenditure.See 11 C.F.R. § 104.13(a).Thus, where the regulations refer to
deposits to all candidate accountswhen
calculating the repayment ratio, in kind contributions must be included.If there were any doubt about the
Commissions intent, it is resolved by the example in the Commission-approved
Financial Control and Compliance Manual (1996) at pp. 67 and 68 where in kind
contributions are expressly included in total deposits when calculating the repayment
ratio.

To conclude that
in kind contributions should be excluded from the mixed pool theory would encourage
candidates to urge potential donors to subsidize with in kind contributions non-qualified
expenses of all sorts (e.g., traffic fines, cell phones that will disappear,
etc.).This would automatically free the
campaign of any obligation to make any restitution of public funds, even though the in
kind donor could just as well have been paying for the cost of any qualified campaign
expense and standard contribution deposits could just as well have been paying for the
non-qualified costs.To avoid such chicanery,
to prevent mind-numbing calculations separating out all reportable in-kind contributions,
and to reflect the fact that such contributions indeed are but one component of the
financial support provided, they shouldbe
included in the mixed pool theory.

[6]
11 C.F.R. § 9034.4(b) provides:Non qualified campaign expenses(1) General.The
following are examples of disbursements that are not qualified campaign expenses.(2) Excessive
expenditures.An expenditure which is in
excess of any of the limitations under 11 CFR. Part 9035 shall not be considered a
qualified campaign expense.The
regulations further specify that repayment determinations for excessive spending are
contemplated.11 C.F.R. §
9038.2(b)(2)(ii)(A).

[7]
Validly adopted regulations have the force and effect of law.Accardi v. Shaughnessy, 347 U.S. 260
(1954).AccordUnited States v.
Nixon, 418 U.S. 683, 695 (1974)(So long as this regulation is extant it has the
force of law.).Put another way:

It is elementary that an agency must
adhere to its own rules and regulations.Adhoc departures from those rules, even to achieve laudable aims, cannot be
sanctioned, Teleprompter Cable Systems v. FCC, 543 F.2d 1379, 1387 (D.C.Cir. 1976),
for therein lies [sic] the seeds of destruction of the orderliness and predictability
which are the hallmarks of lawful administrative action.Simply stated, rules are rules, and fidelity to the rules which have been properly
promulgated, consistent with applicable statutory requirements, is required of those to
whom Congress has entrusted the regulatory missions of modern life.

[10]
By requiring repayment for non-qualified expenses, 26 U.S.C. § 9038(b)(2), by clarifying
that qualified campaign expenses do not include expenses incurred or paid in violation of
any federal law, 26 U.S.C. §9032(9)(B), and by specifying at 2 U.S.C. § 441a(b)(1) that
expenditures in excess of the limit are prohibited, Congress provided explicit
statutory authority for repayment stemming from excessive spending in the primary process.

[11]
My colleagues argue that the use of the phrase qualified campaign expenses in excess
of the expenditure limitation in § 9035 is a sign that Congress did not contemplate
treating excess spending as non-qualified.Yet,
that simply writes off other parts of the law.Congress
meant what it said when it excluded from the definition of qualified campaign
expense any expenses paid in violation of federal law.Why ascribe to Congress an extremely unlikely
approach:depriving the FEC of authority to
recoup public dollars that were constructively misused?

The drafters
needed to clarify that only those expenses related to the presidential nomination campaign
would count toward the expenditure limit, yet they also needed to ensure that anything
above the limit would generate a repayment.Saying
a candidate shall not make qualified campaign expenses above the limit served
the first purpose, while saying anything above thelimit
was not a qualified campaign expense served the second purpose.Hence the awkward combination of §§ 9032(9),
9035(a), and 9038(b)(2).Perhaps the drafters
felt this approach was better because in the general-election provisions enacted several
years earlier there was no separate provision setting a spending limit the exceeding of
which would be a violation of law and hence a non-qualified expense.See Pub. L. 92-178, 85 Stat. 497, Title
VIII (1971), reprinted in Legal History of the Presidential Election Campaign Fund Act (GPO
1984), Vol. II at 2596.In the 1974
Amendments which added the primary election provisions, a spending limit was included not
just once, but twice, at what is now 2 U.S.C. § 441a(b) and at 26 U.S.C. § 9035(a).See Pub. L.. 93-433, 885 Stat. 1263, §§ 101(a),
408(c), reprinted in Legislative History of Federal Election Campaign Act Amendments of
1974 (GPO 1977) at 1135, 1169.